Tuesday, August 11, 2009

The major news headline to hit the press in July was the failure of the announced leadership transition by Temasek Holdings to materialise. Back in February, Ho Ching announced her resignation and that she would hand over power of Singapore's Sovereign Wealth Fund to Charles Goodyear. At that time, the Merrill-BoA merger was being finalised and the BoA share price was hitting record lows. Here's a snapshot, if you don't remember.

At the time, the announcement was very surprising indeed, to observers who had been used to criticising the fact that Mdm Ho Ching was the Prime Minister's wife, as well as Lee Kuan Yew's daughter-in-law. That the top corporate job in Singapore was held by yet another member of the Lee family was, in the eyes of many observers, evidence of cronyism and nepotism in the Lee regime.

Many speculated over the reason for the sudden announcement of the stepping down of Ho Ching to give way to Charles Goodyear. Perhaps it was because of the massive losses that Temasek had sustained due to its over-allocation of resources to the financial sector. Perhaps it was because Ho Ching couldn't take the criticisms of having ascended to the CEO position because of her connections. Whatever the case, it seemed that Temasek was taking a significant step towards its image as a genuinely independent entity - by putting a foreigner in charge.

Fast forward five months, and Chip goodyear is leaving Temasek before even spending a single day as CEO. He is leaving amicably, due to 'strategic differences' - so goes the official line.

Of course, every Singaporean is left scratching his/her head trying to figure what is going wrong with the Temasek leadership transition. According to sources,

"A person familiar with the situation said last week that Mr. Goodyear's proposals for the company's new strategic direction were considered too risky by some, without elaborating. He also said Mr. Goodyear planned changes in senior management that weren't well received by Temasek's board."

But what are the real reasons? Singaporeans will never know... because Tharman Shanmugaratnam is Ho Ching's best friend.

Aug 18, 2009S'pore ParliamentNo goodwill for GoodyearBy Robin Chan

FORMER chief executive-to-be Mr Charles Goodyear received no goodwill payment for his four months' work at Temasek Holdings the Finance Minister revealed in Parliament.

But after 25 minutes of grilling, the House emerged none the wiser over what exactly the strategic differences were that led to his sudden departure.

Members of Parliament threw question after question at Mr Tharman Shanmugaratnam asking him to get Temasek to share with the public what went on behind the scenes but he would not budge.

He said that disclosing the information would serve no strategic purpose and that was not unlike the actions of other publicly-listed companies in the private sector.

'People do want to know, there is curiosity, it is a matter of public interest. That is not sufficient reason to disclose information. It is not sufficient that there be curiosity and interest that you want to disclose information,' he said in response to questioning from Mr Low Thia Khiang, opposition MP for Hougang.

He reiterated that the words in Temasek's statement to the public were carefully chosen and the Government would not add to that.

But of course. Did any of us really expect Mr Shanmugaratnam to reveal anything that we do not already know? Did any of us really expect to find out anything truly and genuinely useful about Temasek through the parliamentary proceedings?

Of course not - and that's because the Government bears ultimate responsibility for Temasek's stuff ups. Ultimately, the Government must bear the consequences of any mismanagement of reserves. Likewise, it will take credit for any 'good' news where Temasek is concerned. The Government has a vested interested in keeping information about Temasek cock-ups hidden away from public consumption.

Thus, can Temasek ever be expected to suddenly become transparent and candid about its management stuff ups and its investment errors? No, it will only be transparent to the extent that its shareholder demands it, and to the extent that regulations require. Since Temasek is not a publicly listed company, Singaporeans cannot expect Temasek to be transparent on the basis that its publicly listed subsidiaries are. And since Government ministers repeatedly say that it is not their role to comment on individual investments - Temasek will never come clean on individual investment decisions, nor will the truth ever be told about why Chip Goodyear quit.

No - what Singaporeans expect from Temasek - they first have to demand of the Government. If Singaporeans want transparency and accountability about Temasek's investments and policy decisions, they have to first demand transparency and accountability from the Singapore Government. If Singaporeans want information about Temasek's decision making process, they have to demand the same sort of information from the Singapore Government. They have to demand that Tharman Shanmugaratnam keep a close watch on the major individual decisions that Temasek makes - and in turn - either report this information to the Singapore people, or require that Temasek makes the appropriate disclosures. It is only after we establish a culture of tranparency and accountability at the highest echelons of Singapore's society, that the lieutenants & the troops will then follow in line.

Indeed, the Temasek Problem is Not a Temasek Problem; The Temasek Problem is a Government of Singapore problem. Ultimately, the quality of corporate governance of Temasek Holdings will mirror the quality of political governance of the Government of Singapore.

And until Singaporeans realise this, they will have to continue living with the opacity and secrecy that shrouds Temasek Holdings - protected as it is by its political masters.